The 2023 At Large Power Brokers
View All 2023 Power Broker Winners
View All 2023 Power Broker Winners
Businesses today move quickly. They may be on the verge of creating innovative, new products or they may be growing their enterprises through mergers and acquisitions. Whatever the case, companies are rapidly evolving and directors and officers (D&O) insurance policies are rising to meet their insurance needs.
There have been over 30 entrants into the D&O market over the past two years, according to Mark Butler, Vice President, Underwriting, D&O for AmTrust EXEC. Rates have dropped significantly as new entrants try to compete with more established insurers.
“Capacity is probably near an all-time high in D&O,” Butler said. “We’re now in a hyper-competitive environment, particularly for public D&O.”
With so many potential carriers in the field and a market that could shift as litigation picks up again as courts are reopening after COVID-19 closures, insureds need to carefully consider which insurer is the best fit for their business. To compete, carriers need to make decisive underwriting decisions and offer bespoke solutions.
“We really dig in, roll up our sleeves, and we look at each of these deals ultimately to try to help our trading partners with a solution for their client,” Butler said.
Over the past few years, carriers have seen an increased demand for D&O policies. The complex line of business has kept pace with a flurry of M&A activity and rising interest in special purpose acquisition companies (SPACs), which are formed by investor-backed management teams seeking to acquire a private company and take it public.
New entrants jumped on this opportunity, driving down D&O rates. Many were excited by the lack of class actions — due to delayed litigation as a result of COVID-19 — and they’ve created precipitous rate drops. Now, as litigation picks back up, Butler believes some carriers could decide to exit the D&O market over the next few years.
“I expect that losses will be higher than people have pegged,” Butler said. “In a few years, I think the rate environment will change and the competition landscape will change. I don’t know if that means certain carriers won’t be in the space anymore or if they’ll pivot to a different product line.”
SPACs and M&A activity are decreasing, too: “There’s no longer a flurry of SPACs coming in, less traditional IPOs, and considerably less M&A activity in general,” Butler said.
These ever-evolving business needs demand agile D&O underwriters who can readily craft inventive insurance solutions — and they need to be able to produce these quotes on a tight deadline. In these situations, underwriters are often trying to strike a balance between finding terms that suit their books while offering the best price and coverage to insureds.
“We can be thoughtful and creative on any deal and every deal,” Butler said. “Our job as underwriters is two prong: One, is superior service to your trading partners. At the same time, two, is balancing and being a responsible [financial] steward of corporate capital.”
Skilled D&O underwriters know that while the type and size of the business is important, they’ll need to consider each company’s unique position and situation. A thorough understanding of the company and their D&O and liability exposures allows underwriters to adequately price a particular business’ risk and determine what kind of terms it can offer.
“We don’t really sweep with a broad brush in terms of industry class or size,” Butler said. “What we like to do is underwrite the story, and we like to do it quickly.”
To make sure carriers understand their story, businesses should expect face-time with their underwriters as well as a robust analysis of their financial exposures. “It’s always the same EXEC people on your deals,” Butler said. “Your underwriter is your underwriter. And I think agents and brokers really appreciate that.”
Third-party resources like the S&P Capital IQ allow underwriters to quickly access financial data so they can evaluate a business’s liability exposures. Data and analytics also allow carriers to assess their book of business, so that they can be sure a particular risk is a good fit for them.
Crafting creative solutions is just one part of the process, however. Underwriters need the authority to act quickly so that insureds conducting fast-moving business deals can ensure their exposures are covered.
Point-of-sale underwriters have full authority to make decisions about what to offer insureds, allowing them to produce quick quotes for D&O risks. Whether a business needs to examine policy language for a merger or insure a complex transaction, fast underwriting decisions can help keep business deals moving.
“We try to be nimble,” Butler said. “If a broker knows they have a 24-hour turnaround, they’re going to hear from us.”
AmTrust EXEC is committed to providing its trading partners with a stable appetite for D&O risks. Its skilled, point-of-sale underwriters have the authority to produce creative insurance solutions at the speed needed in today’s conditions.
“AmTrust is entrepreneurial in spirit, from the top down,” Butler said. “We oftentimes will consider deals that standard carriers either don’t have the time or don’t have the experience to fully analyze in an efficient manner.”
Butler says AmTrust EXEC’s underwriting philosophy is underpinned by core values developed back when the arm was a sponsored MGA, which allowed it to build a lean team of skilled and agile underwriters who were comfortable making decisions on their own.
The book of business was brought in house in January of 2020 and since then, AmTrust had continued to empower its point-of-sale underwriters to make decisions without going through a lot of red tape.
“We’re set up as a lean organization,” Butler said. “Our differentiator is experienced underwriters at the point of sale with full authority.”
Even if the market changes, AmTrust EXEC is prepared to remain consistent for their clients and trading partners. “We’re not an organization that will make sweeping changes to our underwriting philosophy,” Butler said. “We’re not a market that’s going to be in and out of the space.”
AmTrust EXEC’s unique, point-of-sale underwriting system and their commitment to stable capacity have allowed them to add exceptional D&O services to their suite of liability products and solutions. “I expect us to be on a top five list for every agent or broker,” Butler said. “They will always want us in their back pocket for any deal that requires a timely, expert assessment.”
To learn more, visit: https://amtrustfinancial.com/exec.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with AmTrust Financial. The editorial staff of Risk & Insurance had no role in its preparation.